1) Using the constant growth model a firms expected (D1) dividend yield is 3% of the stock price and its growth rate is 7%. If the tax rate is .35% what is the firms cost of equity? A. 10% B. 6.65% C. 8.95% D. More information is required. 2)For many firms the cheapest and most important source of equity capital is in the form of: A. debt. B. common stock. C. preferred stock. D. retained earnings.3) A firm has to consider many factors in setting its pricing policy. We list these as a six-step process. Which of the following is NOT one of these steps? A. Determining demand. B. Researching reference prices in the target market. C. Selecting a pricing method. D. Selecting the final price. E. Selecting the pricing objective. 4) Purchase decisions are based on how consumers perceive prices and what they consider to be the ________ pricenot the marketers stated price. A. current actual B. current sale price C. referent price D. last purchased price

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